The U.S. Securities and Exchange Commission restricts insiders from buying or selling securities based upon knowledge of material confidential and proprietary information not available to the public. But that does not mean insiders cannot trade their company’s shares. Of course, most Board members and executives will not buy shares ahead of merger announcements or other information-heavy events as they did decades ago, but they do follow a pattern of buying low and selling high when trading securities.
Investors would definitely love to buy low and sell high on a consistent basis, but it’s rather impossible to time the market accurately on all occasions. While insider buying usually conveys positive sentiment, insider selling is not necessarily bearish, as some investors might think. Corporate insiders tend to sell shares for a wide range of reasons, some of which have nothing to do with their company’s current developments or future prospects, so investors should carefully interpret this type of activity. That said, the following article will lay out some noteworthy insider selling reported with the SEC on the final trading day of 2016, as well as some mild insider buying observed at two companies.
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Insiders at Venture Capital Firm Buy Shares After Release of Restructuring Plans
Several insiders at Harris & Harris Group Inc. (NASDAQ:TINY) purchased shares during the final few trading sessions of 2016. Daniel B. Wolfe, President, Chief Financial Officer and Chief Compliance Officer, purchased 10,000 shares on Friday at a weighted average price of $1.32 per share, as well as 9,000 shares last Tuesday at an average price of $1.29 per share. However, Dr. Wolfe offloaded 3,465 shares on Friday at $1.38 apiece, a sale reported as a payment of exercise price or tax liability using portion of securities. Following these transactions, the company’s President currently owns an aggregate of 151,686 shares. Board member Kevin Rendino bought 40,432 shares on Thursday for $1.34 each, lifting his overall holding to 202,000 shares.
The publicly-traded venture capital firm operates as a business development company (BDC) focused on BIOLOGY+ companies – interdisciplinary life sciences companies where biology innovation is interconnecting with innovations in various areas such as electronics, physics, and mathematics, to name just a few. Because the company’s share price fell by 37% in 2016 as “the market reflects a pessimistic view of our business model,” the BDC recently released a proposed plan for a strategic restructuring aimed at unlocking value for shareholders. Specifically, Harris & Harris Group Inc. (NASDAQ:TINY) recommends the separation of the company into two distinct entities: a closed-end fund called 180 Degree Capital that will focus on optimizing the value of its existing portfolio and pursuing a new investment strategy focused on constructive activism in undervalued small publicly-traded companies; and HALE.life Corp that will be an operating company focused on building high-growth, precision health and medicine businesses. John W. Rogers’ Ariel Investments was the owner of 4.88 million shares of Harris & Harris Group Inc. (NASDAQ:TINY) at the end of the third quarter.
The next two pages of this insider trading article will discuss the noteworthy insider trading witnessed at four other companies.